...India's Fuel Under-Recoveries Could Fall by More than 25% in FY15 Fitch Ratings estimates that India's fuel under-recoveries (UR) in financial year FY15 (to March 2015) will be around INR1trn ¡ more than 25% lower than FY14's INR1.4trn, provided oil prices do not rise significantly. This will be led largely by the sharp drop in diesel UR ¡ which was down to an average of INR4.1 per litre for the first three months of FY15 versus INR8.5 in FY14. The mechanism of marginally rising monthly diesel prices will bring down the URs, while the rise in crude prices (especially amid the Iraq crisis) is likely to put pressure on the URs. We believe it is unlikely that kerosene or household LPG prices will be raised sharply, for fear of further stoking inflation. The Ministry of Oil & Petroleum had scrapped the scheme for direct benefit transfer to bank accounts of the LPG consumers in March 2014. The URs for the national oil refining and marketing companies are likely to fall if the scheme is reinstated....
